Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, was Chairman of President Bill Clinton’s Council of Economic Advisers and served as Senior Vice President and Chief Economist of the World Bank. His most recent book, co-authored with Bruce Greenwald, is&nbs… read more

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Taking the argument of the final paragraph further: is global economic rebalancing an unavoidable and automatic outcome of the current crisis, which is characterized by recessions in the US and Europe, high unemployment in the US, and rising global inequality? Will domestic consumption in developing economies rise fast enough to balance out the recessionary pressures originating from the West?

If American policymakers attempt to push for global rebalancing by putting pressure on China through measures such as punitive tariffs on Chinese imports (as some economists such as Nouriel Roubini and Martin Wolf have argued), it could lead to Chinese exports becoming less competitive, leading to a slowdown in Chinese growth, making a hard landing more likely.

Since growth has stalled in Brazil and India, it is important for the global economy that China keeps growing. Therefore, it is important that global economic rebalancing occurs as an outcome of growth in China, leading to an increase in domestic consumption, rather than be forced through external punitive measures. On the bright side, the January numbers of China's manufacturing growth suggest that growth isn't slowing. Read more

Yet there are signs that the schizophrenic view of investors, who alternatively punish euro public debt in a dual push for both austerity and growth, may lead to recognition for a need to change policy. We may also hope German exporters increasingly speak out in favor of the more balanced approach that is in Germany's, and Europe's, best interests.

As for the huge productive capacity and labor pools in the developing world that has been added over the last few decades to the global economy, the only possible response in the West is continued focus on education, R&D, innovation, and modernized sustainable infrastructure. Read more

Joschka Fischer
laments the fate of the European Union in the wake of the latest round of the Greek drama.

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